The basics of life insurance
What is life insurance?
Life insurance can pay your dependants money, as a lump sum or as regular payments, when you pass away. This insurance option gives you peace of mind that your loved ones are provided for even when you are not there to provide for them any longer.
The amount of money your dependents will receive depends on the level of cover you purchase. You can decide how much will be paid out and whether you would like it to cover certain things such as rent or mortgage payments.
When you decide how much you will leave to your dependents, you should consider whether it will affect any means-tested benefits they may receive from the government or other institutes.
What is covered with life insurance?
Life insurance usually only covers death. If you cannot provide for your family due to an illness and/or a disability, this insurance policy will not help you and does not cover this.
Some life insurance policies provide a terminal benefit, and this is not something that is automatically granted, however. Terminal use is when money is paid out based on the diagnosis of a terminal illness.
The majority of policies will have some exclusions. The most common one is that a policy might not cover you if you die due to drug or alcohol abuse. In most cases, you are also likely to have to pay more if you take part in a risky sport.
Although they would not be covered as part of life insurance policies, you can still purchase other policies which will cover you for long-term illness, critical illness cover, or total and permanent disability.
Do you need life insurance?
It is highly suggested that you have life insurance if you have:
- People who are dependent on you, such as children who are under the age of 18
- A partner who is reliant on you to provide income
- A family or partner living in a house that still has a mortgage on it.
This is because a life insurance policy will allow you to support still and provide for them after you die.
You might also want a policy which also covers funeral expenses.
You should not rely on the state to look after your family after you are gone. The money they will receive as support from the government is often a lot lower than people realise and, in many cases, will not cover even a month’s mortgage payment.
How much does life insurance cost?
Life insurance can be one of the best value-for-money insurances you can buy. In most cases just a few pennies a day is all you need to know that your family will be left with plenty of financial protection. Monthly premiums however do vary, so it is worth checking what is covered in your policy for its cost.
There are a number of things which will change the price you pay for life insurance:
- How old you are
- How healthy you are
- What your lifestyle is like
- Whether you are a smoker
- The length of the policy you choose
- The amount of money you want covered
Exeter Office
2b Manaton Court
Manaton Close, Matford Business Park
Exeter
EX2 8PF
Tel: 01392 908750
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Henleaze Business Centre,
13 Harbury Road, Henleaze,
Bristol BS9 4PN
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56 Gloucester Road
Kensington
London SW7 4UB
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